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The Basic Marketing Objective of Ellens Stardust Company - Essay Example

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The paper "The Basic Marketing Objective of Ellen’s Stardust Company" discusses that surveys based on online methods and in-store customers, customer feedback forms and conversations with customers visible online can act as effective indicators for understanding the impact created by the business…
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The Basic Marketing Objective of Ellens Stardust Company
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Marketing Plan for Ellen’s Stardust Contents Contents 2 Executive Summary 3 Background Analysis 3 Marketing Objectives 5 Marketing Strategy 7 Marketing Mix 9 Action Budget Plans 12 Organizational Implications 13 Contingencies 13 Evaluation and monitoring strategies 14 Reference List 17 Executive Summary This paper has presented the marketing plan of Ellen’s Stardust Diner, which is one of the most popular diners in New York City. The basic marketing objective of the company is to expand in new markets with the existing range of products and services offered. In the first two years of operation, Ellen’s wants to achieve 2%-4% of market share. The diner desires to cash on its retro-based cultural theme while operating in London West End. Ellen’s Stardust Diner can use franchising as a strategy for entering U.K. The evaluation of marketing mix strategies has revealed that London West End is the ideal place to open the restaurant, owing to popularity of the place. Other aspects of the marketing mix have been discussed in details in this section. This coupled with the offering of traditional American delicacies and retro music is likely to boost performance of the business. The section covering action budget plans has shown that nearly $5 million can be spent by the business as marketing expenses. The detailed break-up of the components has also been provided. The section on the contingencies plan discussed the additional measures that can be adopted if the original planning is not realized. Finally, the section on evaluation and monitoring elaborates on various steps that can be adopted by Ellen’s Stardust Diner so as to monitor the marketing plan. Few techniques that has been pointed out includes return on investment, market share analysis, customer attitude tracking, market expense to sales ratio and last but not the least, analysis of sales figures. Background Analysis Ellen’s Stardust Diner is among one of the best themed dining restaurants based in New York City, which appeals to customers of all age groups. The business has come a long way since being established 27 years ago (Ellen’s Stardust Diner, 2013). The analysis of macro environment of the business has revealed that healthy eating habits promoted by the UK government and commitment towards reduction of waste products of the industry might entail greater operational costs. UK is slowly recovering from the recession; and as fast food restaurants perform better during sluggish economic performance, the business gets to experience greater opportunities. London West End has a similar cultural taste to that of New York and this improves the scope of opportunities for the restaurant (Petusevsky and Whole Foods, Inc, 2010). As the population in this place has a tendency of eating outside, the diner can afford to capitalize on it. London West End houses health conscious customers who are quite busy with their lives. This aspect is also quite similar to New York, where individuals are equally health conscious and busy. Few technological innovation like, EFTPOS for electronic bill payments and online marketing modes, can be used for ensuring increased business opportunities (Schmidt, 2010). The delicacies served by the restaurant involve certain animal products due to which it can face challenges in business operation, in case they fail to consider issues of animal rights (Barrow, 2011). The U.K. government has also been imposing restrictions on the restaurant industry to reduce their ecological and carbon footprint (Brown and Harwood, 2010). Analysis of internal working of the diner has helped to understand opportunities and challenges that are currently faced by the business. The small scale operation of the diner makes it difficult to be financially stable for entering in new markets. Moreover, stiff competition from the existing food joints will also be very difficult to cope with. Most fast food joints in London West End operate through franchises and are well-established. Entering the market successfully will, therefore, be a challenge (Winterman, 2011). As the scale of operation is small, considerable costs have to be acquired by the business in recruiting new workforce and setting up in a new place. The current revenue flow is robust, but entering London will require higher generation of revenue (Ellen’s Stardust Diner, 2013). In order to establish a competitive advantage over the existing rivals, Ellen’s got to cash on its retro theme, owing to the theme’s popularity in American pop culture. Actors and musicians alike have been intrigued by the theme in America. Despite the challenges, rising trend of health-conscious low-calorie diet of the Londoners seems promising for venturing in U.K. The conservative British crowd is likely to be impressed with the retro theme of the restaurant, signifying promising future sales. The restaurant takes pride in being loyal to a number of celebrities like, Sarah Jessica Parker and few American Idol contestants, which has enhanced its brand name immensely. This brand value is likely to work well with the British as well as be beneficial for the business. Marketing Objectives Marketing objective defines the aim that a business desires to achieve, while beginning operation. There can be various types of marketing objectives like, advertising objectives, financial objectives, product and pricing objectives and so on. The most important aspect of marketing objective is that it only relates to markets and products. The rationale behind this is that sales of products manufactured by the company can mainly accomplish the financial goals that are set beforehand and all other processes, like, pricing, advertising and levels of service, are ways in which the sales can be boosted (Bowie and Buttle, 2013). Marketing objectives of a company can be explained with the help of the following matrix. Table 1: Ansoff matrix   Products   Markets Market Penetration Product Development     Market Development Diversification           (Source: Author’s creation) Market penetration relates to introduction of same products in existing markets for generating higher revenue and sales. Product Development refers to launching of new products in existing markets for capturing higher market share. Market development refers to introduction of existing products in new markets and finally, diversification signifies the launch of new products in new markets (McDonald and Wilson, 2011). In this case, Ellen’s Stardust Diner is undertaking market development as it is expanding its market to London West End with the existing delicacies. The marketing objectives of Ellen’s Stardust are: To achieve 2%-3% of the market share within first two years of operation Be perceived as a diner that promotes healthy eating in an interesting ambience Be regarded as a diner that nurture culture along with dining Specific: The diner has studied the trends of eating out that are seen among London crowd and has already estimated a rising trend among people to dine outside. Based on this understanding, the diner can specifically target groups with appropriate items for consumption, thereby maximizing the sales volumes. The company can effectively use its brand name to address celebrities and artists in London, which can in turn provide a great boost to the sales. Measurable: The present statistics show that franchise outlets comprise only 20% of the industry share (IBIS World, 2013). Based on this estimate, the projected market share of Ellen’s is 2%-4%. The other two objectives involve qualitative variables. In New York, the diner has been responsible for establishing careers of artists like, Shirley and Stephen Tyler Davis. Hence, effective publicity can generate enthusiasm among the target clients. Achievable: As current scale of operation of the company is not very high, it aims to achieve a reasonable market share with a lower bound of 2%. If the sales gains pace, then 3% of market share can also be achieved. Realistic: The marketing objectives are quite realistic because the diner plans to rely on existing strengths, like, that of retro theme and conservative dining environment. This concept is relatively new for London. Furthermore, projections of the market share are also reasonable and plausible. Time specific: The time horizon to achieve the target is two years. Proper monitoring of the management and marketing objectives are to be done in every step to assure that timely success can be achieved. Competent marketing teams and effective monitoring is required for timely realization of goals. Marketing Strategy Marketing objectives can only be achieved through proper marketing strategies. If objective is the goal of a company, then strategy is the path to reach that goal. Marketing strategies that are employed to achieve marketing objectives include product, price, place and promotion techniques. The key element of formulating a successful marketing plan is to identify likes and dislikes of customers so as to accurately identify marketing strategies that can be used for expanding the customer base. It has been analysed that franchising would be the best possible mode of entry to start business in London West End. This approach will be ideal for the business because most successful food joints presently running in London have entered the market through franchising. The reasons for choosing franchising are the associated lower risks and ease of operational and financing support. Most of the food joints that run through franchising can build a network of outlets for improving their visibility. They can also use their existing brand name to lure customers in the new markets (Pradhan, 2009). For all these reasons, franchising will be the ideal mode of entry for Ellen’s Stardust Diner. The products of the restaurant range from salads and sandwiches to burgers and desserts. The products offered by the diner can appeal to a wide range of customers. This includes business individuals who desire to invest less time on good quality food and drinks; families who visit to relax and dine outside; and high profile celebrity clients with sophisticated approach. Expectations regarding the service and quality of food are found to differ for different segments of customers. So, the diner needs to segment its products and services separately as this can fulfil expectations of each category of customers by helping to comprehend their needs and then deliver accordingly. This will not be very challenging for the diner as it has sufficient experience in attracting sophisticated individuals through the retro-based theme, cultural activities and fine service. The location also becomes very crucial for success of the business activity. Providing customers with the correct product at the correct place through a proper distribution system ensures prosperity of the business. Diner service requires people to visit the location, so strategic placement of the outlet is pivotal for securing significant footfalls. Pricing is another key variable for starting up any business as price differentials between products directly impacts the purchasing behaviour of customers. If products of the diner are very steeply priced, then customers will refuse to purchase them and prefer eating at a different place. On the contrary, if products are very cheap, then customers may doubt the quality and service of the place. Effective pricing is, therefore crucial for ensuring sufficient customers. Promotion constitutes the fourth P in marketing mix and is related to communication of the product details to target customers. This is achieved through measures like, advertising, personal selling and public relations. The main idea is to educate and inform customers about products of the company and influence them into purchasing the same. Marketing Mix The marketing mix of the food joint consists of seven elements, namely product (or service), pricing, position, promotion, people, process and physical environment. Each of these elements is explained below: Product: In hospitality industry involving hotels or restaurants, tangible components relate to the physical products offered and intangible ones consist of services offered. The products offered by the diner will be existing ones in the menu, which is served in New York. The traditional American dishes offered by the diner can prove to be quite lucrative. The existing product range of the diner is quite wide and can cater to a wide range of demography of all age groups. Proper segmentation of products is needed for different groups of customers so as to improve appropriateness of the products for each group (Oh and Pizam, 2008). The services provided by the singing and waiting staff will be equally important as this is one of the major selling points of the restaurant. The unique combination of traditional dishes and retro-based theme of the diner will ensure an enriching experience for customers. Pricing: Pricing mix strategy of the hospitality industry includes factors beyond the actual price that is charged by the firm. It encompasses perception about the value of customers. The most popular techniques of pricing employed by fast food joints include providing volume discounts and combining a variety of products for offering discount on total bill of the customer. These types of pricing strategies render products of a firm lucrative as customers perceive the products to have higher value than the money paid for them (Oh and Pizam, 2008). This type of a pricing strategy can be adopted by Ellen’s with special discounts on volume purchase or discounts on specific days of the week; this can boost sales and draw in more customers. Position: The place that has been selected to open the restaurant will also contribute positively towards increasing visibility. This is because London West End is among one of the most popular neighbourhoods in London as well as easily accessible. The analysis of the market has suggested that the place is frequently visited by people for dining purposes. This can secure additional footfall. Unlike New York where most of the restaurants are scattered in and around theatres to pull in the maximum crowd, London’s West End houses some of the most popular restaurants and food joints in London. The area is highly popular among the affluent crowd, which is particularly why this has been chosen for Ellen’s Stardust Diner. The area is most crowded during the pre-theatre time and footfall during lunch and post-theatre is comparatively lesser (Bittman, 2014). Promotion: There are basically four different parameters that can be considered for promotional mix of firms, namely mass advertising, specific advertising for targeting specific customer segments, public relations whereby a company maintains goodwill among customers and sales promotion involving techniques like, price reduction, free distribution of sample and discount coupons. In case of food joints, television and radio commercials, billboards and online based marketing techniques are widely used by companies. Television commercials are most commonly used to visually advertise products and radio commercials are primarily useful while commuting. Online marketing through social media and other online based measures like, e-mailing, have also become very common nowadays with rising popularity of the internet (Rao, 2004). Ellen’s Stardust Diner must use all of the abovementioned techniques to enhance their visibility to customers, which will increase their sales. People: This refers to the staff of organizations responsible for providing the best services to customers in order to raise the level of customer satisfaction. The waiting staff of the restaurant must be well-behaved to augment the footfall (Rao, 2004). Ellen’s has already established a good reputation in New York with the kind of customer service it provides and this can act as strength of the organization. Average response time for the order and flexible hours of operation are also important variables to consider for improving customer satisfaction. Process: Process involves procedures, systems, machinery and other support mechanisms through which services can be delivered to customers. These activities facilitate better delivery of services to visitors (Rao, 2004). This aspect is also very important for Ellen’s Stardust as these activities will help to better quality of service provided by the restaurant. The use of electronic billing system and installation of EFTPOS is likely to boost the overall quality of service as well as credibility of the organization. Adopting these technologies also reduces the average time required for delivering the service and automatically raises satisfaction of customers. Physical evidence: This relates to the outward appearance of products that are being sold by a firm. In case of diners and restaurants, once the customer steps out after consuming the physical product, only the experience remains (Rao, 2004). For this reason, it will be important for Ellen’s to create a physical environment within the diner, which will prove attractive for customers. The retro-based theme of the restaurant has already been a winner in New York and acts as USP of the diner. Along with this, performances in the diner are of additional charm for the crowd, thereby increasing the number of footfall. Action Budget Plans As per the reports on revenue of the restaurant, it has been estimated that the revenue ranges from $50 million to $100 million (Ellen’s Stardust Diner, 2013). The lower bound is to be considered as the revenue because the upper bound is additional and may not be realized always. If 10% of the revenue can be allocated to advertising and marketing, it roughly accounts for $5 million. This amount must be used efficiently in marketing and advertising as well as in the operational costs. About 45% of the cost can be allocated for the purpose of advertising. This implies that $2.25 million can be allocated for this purpose. For above-the-line advertising 55% of the budget can be allocated, which is equivalent to $1.2million. This will include television, radio, newspaper and magazine advertisements. 25% of the budget that is equivalent to $0.55 million can be invested in below-the-line advertising, which involves techniques like, free distribution of sample, distribution of flyers, promotion stickers and handbills in busy areas. 20% of the cost may be invested in digital marketing, specifically because internet and social media has become very popular medium for advertisements. The remaining 55% of the budget, which is equivalent to $2.75 dollars, can be allocated for other marketing expenditure incurred for setting up the diner. This will be associated with various research work related to marketing activities like, campaigning, paying the staff associated with marketing activities and so on. Organizational Implications It has already been stated that the retro theme is one of the biggest selling points of Ellen’s Stardust Diner. However, implementing the same in London may be difficult as this will require thorough research on the recruitment process of performing staff, which is likely to heighten operating costs of the diner. In order to do this job, a popular U.K. based performing band can be selected and the task of recruiting artists for the diner can be directly outsourced to this band. Outsourcing can help the diner in two ways. Firstly, operational cost of the diner can be greatly reduced as performing employees can be paid on a contractual basis. The chosen band that is responsible for recruiting artists will be directly concerned about financial issues of the members that are hired. This can lead to another benefit in terms of cultural differences between the two countries. Secondly, by hiring local artists, the diner will be able to promote local culture; this will enhance appeal of the restaurant to the public. In this way, the diner can strictly focus on its key areas of service, which is serving good quality of food and through this specialization of service, higher efficiency can be attained. Also, in order to achieve its objective of 2-3% market share within the first two years, the diner must employ aggressive advertising and promotional strategies for improving visibility. Contingencies Venturing into new markets can always involve the risk that initial plans for achieving goals might not be met. 10% deviation from the estimated sales projections can always be accepted. However, if deviations are more than 70%, then certain actions must be taken by Ellen Stardust so as to prevent them from closing down. If the level of sales is unacceptable during the first year of operation, then the organization must rely on aggressive promotional strategies by distributing flyers in busy locations in addition to existing modes of advertising. Another way of combating the crisis is to appoint local marketing specialists in London West End area; this will improve sales. The relationship will be strictly contractual, where payment for these marketing specialists will depend on sales of the organization. The evaluation of sales must be done after six months from the date of operation as this foregrounds the advancement made towards achieving the estimated market share of 2%. The cash flow statement of the firm needs to be monitored regularly to examine any unforeseen expenses, which are undermining financial performance of the firm. Finally, if the returns on equity are too low, then per unit cost of production and marketing are to be compared with sales. If the profit margin is not very strong, then differential pricing for different customer groups can be introduced. Minimizing production costs in this regard can also be helpful as rise in prices may result in loss of customer base Evaluation and monitoring strategies Evaluating the marketing plans is extremely important to understand whether an organization would be able to achieve its goals or fail to do so. Plans for facilitating monitoring activities are a type of evaluation schedule, which not only examine the progress of action programs, but also study results of the strategies of marketing in terms of sales and profit figures (FAO Corporate Document Repository, n.d.). There are several parameters to determine whether a business is successfully progressing towards its goals or lagging behind. The methods that can be applied by Ellen’s Stardust Diner are: Return on investment: This is one of the most common ways to track target of the business, which is deduced from the amount of investment made in various components of the business and profits that are derived from them; for example, the cost that is incurred in mass media and social media advertisement; and rise in sales at the end of the campaign (Richter, 2012). The proper breakdown of various components in expenditure related to marketing and calculating returns from each of them can result in better efficiency of the system. Analysis of the sales figure: This is also a direct method of analyzing performance of the business, after commencing operations. Quarterly analysis of the sales figure will reveal the upwards or downward movement of organisational sales (Richter, 2012). If the sales are rising and are closely following the forecasted trends, then the business plan is working as anticipated. If actual results are observed to diverge significantly (say more than 25%) from the forecasted ones, then promotional activities must be improved to arrest the diversion. Market expense to sales ratio: This is a useful tool that helps in assessing whether Ellen’s Stardust Diner is spending too high or too low on marketing so as to achieve the sales targets. There are basically five components in this measure, namely ratio of sales promotion to actual sales, cost of advertising to sales, size of sales force to sales, research in marketing to sales and sales administration to sales (FAO Corporate Document Repository, n.d.). These parameters can be very useful to determine performance of the organization. Market share analysis: The company has a very well-defined market share objective. It aims to achieve 2% market share during the first year of its operation and maximum up to 4% in the second year. Market share is determined by the following parameters (FAO Corporate Document Repository, n.d.): Total market share = Customer × Customer × Customer × Price penetration loyalty selectivity selectivity (CP) (CL) (CS) (PS) If the target market share is not achieved during the first year, then existing strategies need to be modified as they do not prove beneficial. Understanding Customer attitude: This is a qualitative method of tracking performance of the business. It has been observed that surveys based on online methods and in-store customers, customer feedback forms and conversations with customers visible online can act as effective indicators for understanding the impact created by the business and the marketing plan (Richter, 2012). If some of the products are garnering negative reviews, then management can improve them; and ones that are gathering more positive reviews are those to be promoted. Reference List Barrow, C., 2011. Starting a business for dummies. New Jersey: John Wiley & Sons. Bittman, S., 2014. London’s West End, a stage for good eating. New York Times, [online] 13 February. Available at: [Accessed 24 March 2014]. Bowie, D. and Buttle, F., 2013. Hospitality marketing. London: Routledge. Brown, A. and Harwood, S., 2010. International business: globalisation and trade. New Jersey: Pearson Custom Publications. Ellen’s Stardust Diner, 2013. Ellen’s Stardust Diner. [online] Available at: [Accessed 24 March 2014]. FAO Corporate Document Repository, n.d. Marketing strategy, planning and control. [online] Available at: [Accessed 24 March 2014]. IBIS World, 2013. Takeaway & fast-food restaurants market research report. [online] Available at: [Accessed 24 March 2014]. McDonald, M. and Wilson, H., 2011. Marketing Plans: How to prepare them, how to use them. New Jersey: John Wiley & Sons. Oh, H. and Pizam, A., 2008. Handbook of hospitality marketing management. Oxford: Elsevier. Petusevsky, S. and Whole Foods, Inc, 2010. The whole foods market cookbook: a guide to natural foods with 350 recipes. London: Crown Publishing Group. Pradhan, S., 2009. Retailing management: Text and cases. New Delhi: Tata McGraw-Hill Education. Rao, K. R. M., 2004. Services marketing. New Delhi: Pearson Education India. Richter, T., 2012. International marketing mix management: theoretical framework, contingency factors and empirical findings from world-markets. Berlin: Logos Verlag Berlin Gmbh. Schmidt, C., 2010. Report for venture investors: on the emerging market: personalised nutrition. Munich: GRIN Verlag. Winterman, D., 2011. Food labelling. [online] Available at: [Accessed 24 March 2014]. Read More
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